What are finance executives’ top priorities for 2016? Consulting firm Protiviti tries to capture them in its 2016 Finance Priorities Survey, released on Tuesday.

No matter how it slices and dices the data, Protiviti finds that the top priority for CFOs next year is margin and earnings performance. Among CFOs and vice president-level finance executives, that is followed by cybersecurity risks; strategic planning; periodic forecasting; and budgeting.

“With the modest economic recovery of the past few years, finance functions are preparing the enterprise for challenges that could materialize at any time by working to preserve margins and by sustaining a strong focus on working capital management,” Ryan Senter, a Protiviti managing director, says in a press release.

agendaThe survey of 650 CFOs, vice presidents of finance, corporate controllers, and other finance management professionals assesses the ranking of other priorities using five categories: process capabilities (financial transactions); process capabilities (financial analysis); emerging issues; technical capabilities; and organizational capabilities.

For example, under financial transactions, finance executives say they are seeking more precision and efficiency in cash forecasting, period-end close, and reconciliation and consolidation activities.

“Cash forecasting represents one of the highest-ranked priorities in our study, which may be indicative of tepid economic recovery in many industries,” the Protiviti report says.

In the other process category, financial analysis, meat and potatoes activities like strategic planning, budgeting, performance management, and balanced scorecards are among the highest-ranked priorities.

And CFOs are reaching out to operational units to achieve goals in these areas, says Protiviti. “Finance functions are working … to equip business partners throughout the organization with more precise and real-time information on performance, cash positions, and profitability drivers to strengthen strategic decision-making.”

But finance executives are also trying to make traditional performance management more precise and integrated, says Protiviti, by focusing on risk management (What are the risks tied to our forecasts?) profitability analysis (How profitable is this customer channel?) and business intelligence.

The top “emerging issues” in the minds of most finance executives are the aforementioned margin and earnings performance and cybersecurity.

As cyber attacks multiply, CFOs will play a big role in assessing risks and developing measures to prevent breaches. “From a finance perspective, there are significant concerns regarding the security of financial information as well as the financial impacts of the security of all data,” says Protiviti. In addition, however, “Regulations and regulatory oversight concerning cybersecurity and information privacy undoubtedly will increase worldwide, which will place further burdens on finance functions to ensure they are in compliance with new requirements for information security and data management.”

On the technical front,  tax planning and forecasting, U.S. tax laws, domestic regulations, and in-country taxes are the top priorities, as they were last year.

“Domestic debates regarding a major overhaul of the U.S. tax code, together with sweeping international tax changes like the Base Erosion and Profit Shifting plan from the [OECD], confirm that these challenges are likely to intensify, perhaps substantially.”

Because of this, finance executives expect the demand for technical accounting and tax expertise to intensify also.

Among organizational capabilities, CFOs cite perennials such as leadership and change management in their organizations as significant priorities. But there is also a large year-over-year increase in things like written communication, networking with peers, presenting to large groups, and Six Sigma and continuous improvement.

Indeed, “CFOs and finance executives recognize that the execution of their priorities increasingly depends on their ability to lead outside the function; this is certainly the case when it comes to managing margins, conducting strategic planning, and addressing cybersecurity risks,” says Protiviti.

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7 responses to “CFOs Reveal Their Top Issues for 2016”

  1. The challenges that must be overcome to continually increase revenue and profits only get bigger, such that CFOs might do well to go beyond setting higher targets to also guide business operations executives to newer performance and produtivity improvement methods that most internally-focused operations have yet to apply. In particular, “human-dependent” business operations might want to try the emerging new applied science of “humaneering”, which integrates and applies human science principles to unleash human performance, in much the same way that engineering already applies physical science to standardized, mechanized and automated equipment and process performance. See what The European Productivity Network says about humaneering ( http://eanpc.eu/insights/Focus/82 ), and read the 3-part article they invited me to write on how humaneering improves the financial performance of human-dependent operations ( http://www.designedwork.com/materials/workreconsidered123.pdf ).

    • Mr. Pepitone, you’ve correctly identified that human issues seem to be missing at this level of strategy and strategic analysis. The chief rationale is both straightforward and similar to that of many other such analytical surveys, simply that human matters aren’t the chief pecuniary issues with which corporations above tactical levels. Humans have for quite some time been managed as “capital,” reduced to a commodity with the help of the adept hand of HRM. In fairness, such matters as strategic planning, budgeting, performance management, and balanced scorecards are still at least to some extent “human dependent.” But the strategy of at the C-Level is to reduce that dependence rather than throw more money at it. While ‘humaneering’ has merit, and may provide a superb tactical advantage to organizations in the near term, the longer term strategy will continue to address humans (talent) more appropriately under rubric of risk management and risk mitigation, much the same way as it would address the risk of a lost or stolen laptop/hard drive at the tactical level under the cybersecurity umbrella.

    • Organisations will always thrive when people & culture are the centre of everything they do, before strategy. Happy and satisfied employees make a happy company, thus a healthy top and bottom lines

  2. Books, seminars, webinars, MBA programs, and all the buzz words around human capital and making it more valuable typically miss the point. The humans you have already own the knowledge you need to make major transformations, the impediments are also human, in the form of culture, politics and silos. In the vast majority of large and medium clients I have worked with over several decades, the CFO is a bit more than just another officer, but organizationally the CFO’s are one of the team, with just a different set of priorities, but in many cases still affected by culture, politics and his or her peer’s silos.

    Here’s a real example, one of many, where we suspended the negative affects of culture, politics and silos, had the CEO pose a single question to the employees with these rules. If the employee suggestion was good, management had only a few days to implement it. If someone in management, including all the “C’s” stifled a good idea, we became agents for the employees and carried the debate to the CEO. What an amazing affect the light of day has on people in control.

    My point, this approach has always worked to kick off a major transformation. The projects last only ten weeks and the results, all from employees protected from the three blockers are shocking. One example, The CEO question was released to the employees. Ten weeks later decisions had already been made which reduced SG&A by a sustainable $300 million, reduced approved capital by $200 million, inventory was down $45 million and the previously announced layoffs (The WARN ACT) were reduce by 60%. No gimmicks, just removing the politics, culture and silos, each of which unfortunately survives intact, but the employee engagement continues and both earnings and morale are increased in the process. I’ve been implementing this approach for twenty years and there has never been a client where some in management were not acting in the best interest of the enterprise and held to their views right up to termination, which is absolutely absurd. It’s not enough to publish a great strategy, periodically you need to suspend the three blockers just to see what’s really going on. Our greatest school throughout the years has been the number of folks at the top who really hate this approach, the results notwithstanding. They can’t stand, and in some cases can’t withstand the light of day shining on their world. A single question from the CEO and no interference in the middle is all it takes.

  3. Or simply stop putting jobs off-shore and start employing your ultimate customer – the person on the street. AT the end of the day, no matter where you sit in the food chain every business is dependent upon the person in the street having money in their pockets and spending it. If people are competing unrealistically with off-shore resources and are out of work or on ultra low pay then they can’t afford to shop and spend. Hence the pickle the economy is in.

  4. I would focus on what drives the results rather than just the results themselves. There are plenty of opportunities for a CFO to make the relevant changes that affect the results, but they may need to expand their focus to include people, contracts, technology and ethics. Please read the following for more details http://blog.ifsworld.com/?p=7371

  5. I agree that improving strategic decision making, profitability and visibility will continue to be hot topic for CFOs as the year progresses. But, finding technical solutions to improve business performance also needs to be a high priority as companies try to break from a culture of inefficient data and analytics tools. Here’s a whitepaper that outlines strategies CFOs can take this year to improve their business processes: http://www.scandh.com/resource/white-paper/embracing-the-future-of-business-analytics/

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